Closing out the Songbird Chapter
A version of the email we shared with Songbird's investors, patients, and other stakeholders
In March, Songbird was acquired by Kyo, and we sent a version of the following email to our investors and team.
As I’ve already written, our story was a complicated one. We set out with a bold ambition, made mistakes, had successes, and I’ve spent time reflecting on and processing the journey (Spiritual Runway).
Four years ago, inspired by our own experiences with family mental health challenges, we decided to build a company to improve children’s autism care. Since then, we’ve had the privilege of serving hundreds of families across three states.
A few months ago, the Songbird chapter wrapped up. Most importantly, we found a home for our families, team, and everything we built.
Ultimately, I’m left with gratitude and optimism. Gratitude for everyone involved along the way and for a substantial amount of personal learning and life experience. And optimism to take learnings from our experience to continue to improve human health and do ambitious things.
One of my favorite quotes is a reminder that everything around us is built by someone:
“As you become an adult, you realize that things around you weren't just always there; people made them happen. But only recently have I started to internalize how much tenacity *everything* requires. That hotel, that park, that railway. The world is a museum of passion projects.” (source)
Throughout my journey—contemplating leaving my job, getting Songbird off the ground, at our highest peaks, and during the challenging late-night troughs—reading other entrepreneurs’ stories was always helpful. I hope my writings can help people who dare to build incredible things.
I’m currently on a sabbatical—writing, recharging, and exploring a range of personal interests. I’m still more excited than ever to be building, so more updates to come soon.
Onwards.
March Announcement
Hi everyone,
We started Songbird over 3.5 years ago with the belief that technology would help us build a new system of care for the 1.5 million children with autism. Since then, we’ve touched the lives of hundreds of families across 3 states, partnered nationally with most of the largest US payors, and built a passionate team that has worked tirelessly toward this vision.
We still believe in the need and opportunity for transformation in autism care, but we made the difficult decision to sell Songbird. As of this week, Songbird has been acquired by Kyo.
Kyo is a large incumbent autism care provider, funded by Norwest Ventures Growth Equity. They’ve been around for ~18 years, have 1000+ clinicians (putting them among the largest national providers), share our values and vision for technology, and are innovating through value-based care. In this decision, our priority has been to ensure continuity of care for our families and find a home for our team. We are confident that Kyo is the right home and are excited for them to continue our mission.
We’ll be reaching out to each of you to thank you for your partnership and answer questions. We appreciate everything you all have provided over the last 3+ years: tactical support, guidance on fundamental decisions, personal care, and everything in between. We’ve gone on a huge journey to solve a deep and urgent problem in healthcare—few startups have built solutions for the autism and broader developmental disability population—and now our work will live on within Kyo.
Our goal here is to walk through this decision and what changed in the past months. A few factors led us to believe exploring a sale was ultimately the best outcome.
Structural margin and provider retention problems in our core California in-home business. Margin and retention challenges are most acute in California. They affect the quality of the in-home business model. For example, when factoring in $55 for 1 hour of direct therapy, an hourly behavior technician wage of $27 ($32 after benefits load), and $10 in cost allocation to the behavior analyst supervisor, we end up with 15-20% gross margin profile. (Though, in some less mature markets we held a ~50% gross margin.) Therefore we need significantly greater scale to build a profitable, venture-scale business. Wage inflation, which has driven the $27/hour cost, also makes it difficult to hire and retain in-home providers in this region, and therefore hard to grow. Additionally, there are questions about whether the in-home therapist job is a viable long-term career, which affects our churn metrics.
Concerns after further analyzing our brick-and-mortar plan. We came to believe our plan to build brick-and-mortar clinics was not worth pursuing. As we began to execute on it, we realized that some assumptions were not reasonable and there was no room for error. Our plan was to build 3 centers over 18-20 months, grow our in-home business a modest amount, and generate enough contribution margin to get to operating margin profitability. But baked into this plan were a set of aggressive assumptions around rampup, budget, and profitability. The value of pursuing this plan was also limited given the point about opportunity size below.
Changed belief in the quality (and “venture viability”) of the market opportunity. We continue to believe there will be an autism care provider which delivers a consumer-grade patient experience and leverages software to drive efficient care delivery. But it is still, fundamentally, a services business. And these businesses are measured by the structural factors that determine margin. Technology and software are only one part among the many needed to run an operationally excellent healthcare services company. As we’ve continued to execute, we’ve confronted some of the core challenges of our business: the labor-intensive clinical model, field-wide provider churn, and the operational complexity of in-home care. Technology is not a magic wand, and we recognized that these challenges wouldn’t change even with a clinic-based business.
Given this, rather than pursue the high-relative-risk lower-reward option of building a brick-and-mortar business, we decided the right decision was to explore a sale (being thoughtful about care continuity and our team’s employment). We secured multiple offers, and we chose the best option to take care of our families and team. With that, Kyo has acquired the vast majority of our team, families, and assets.
We still believe there’s an opportunity to transform care, and we’ll still be cheering emphatically for the clinicians and other builders in this space.
We continue to be proud and inspired by the human impact our care has had on hundreds of children—many of whom, for the first time, are able to speak, to use a toilet, to make eye contact, to comfortably leave their home, to sleep through the night. This early intervention impacts a child for the next decades of their life. And it changes an entire family’s day-to-day lived experience for years to come. In the hundreds of children we’ve supported—and how their lives are now different for years to come—Songbird will continue to live on.
Finally, to our investors, team, and supporters: thank you for your belief in us. We feel so incredibly grateful to have had this group’s support. It’s been one of the greatest joys in our life to take this journey on a big problem we both personally know in our lives. Thank you for giving us this chance.
Onwards,
-Ben and Phil